An Analysis of Asset Management Vendors Using Porter’s Model

Is the Market Big Enough for All?
by Jay Wolstenholme, November 30, 2015
Industry Trends
Global

Abstract

$100 trillion of global investable assets demands money management that, in turn, demands systems and operational services to run. Traditional and new vendors are rapidly filling this space, but is there enough room for all?

Multiple buy side vendors are expanding their vertical product stack in an attempt to provide asset managers, custodians, fund administrators, and hedge funds full front-to-back applications and services. Additionally, more traditional sell side vendors are crossing the boundaries into the buy side, and new players keep entering the marketplace. Is the field too crowded? Are vendors providing additional cost benefit to buy side clients? Are the buy side’s needs so diverse and growing at such a rate to be able to sustain the multitude of vendors?

“There is roughly $100 trillion of investable assets on a global level, and that amount is growing and transitioning due to demographic shifts and the continuing transition of pension savings,” says Jay Wolstenholme, a senior analyst with Celent’s Insurance practice and author of the report. “All these assets need management and resulting systems and services. There is definitely competition in the vendor space to serve this market.”

This report utilizes Porter’s five competitive forces to analyze the level of competition among technology vendors in the asset management industry.

Celent is a research and advisory firm dedicated to helping financial institutions formulate comprehensive business and technology strategies. Celent publishes reports identifying trends and best practices in financial services technology and conducts consulting engagements for financial institutions looking to use technology to enhance existing business processes or launch new business strategies. With a team of internationally based analysts, Celent is uniquely positioned to offer strategic advice and market insights on a global basis. Celent is a member of the Oliver Wyman Group, which is a wholly-owned subsidiary of Marsh & McLennan Companies [NYSE: MMC].

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Table of Contents

Executive Summary

1

 

Key Research Questions

1

Introduction

3

 

Key Research Questions

3

Porter’s Competitive Factor Model

4

 

Porter’s Five Competitive Forces

4

Categorizing the Buy Side and Its Workflows

6

 

Buy Side Categorized

6

Utilizing Porter’s Competitive Factor Model

10

 

Traditional Competitors

10

 

Threat of Entrants

11

 

Threat of Substitute Products or Services

12

 

Bargaining Power of Customers (Buyers)

13

 

Bargaining Power of Sellers (Vendors)

14

Conclusion

16

Leveraging Celent’s Expertise

18

 

Support for Financial Institutions

18

 

Support for Vendors

18

Related Celent Research

19

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